SIR GORDON WHITE

The British refugee who is colonising America

PROFILE

Now that tulips are in bloom in tubs along Park Avenue, you may sometimes see a tall and slim gentleman standing on the corner of 72nd Street or stepping from it into an extended limousine. He wears a well-cut English suit, a Jermyn Street shirt and a racing trilby.

He might be a retired ambassador or one of those elderly British character actors who still flourish in odd corners of Holly- wood. He is cheerful, foppish and a little deaf. He does not look like a businessman, least of all a Yorkshire businessman. But Sir Gordon White, 65 on 11 May, is as careful and ruthless a businessman as Yorkshire ever nursed and Park Avenue sheltered. He arrived in New York in 1973, a seedy refugee from the Barber boom, with £3,000 in cash. As chairman of Han- son Industries, the North American arm of Hanson, he now runs companies which sell goods worth £3,000,000,000 a year.

These companies make the following useful products: lingerie fabrics, hassocks, typewriters, golf shoes, garden tools, lum- ber, cement, light fixtures, paint, chemic- als, paper, filing cabinets, hot dogs, pastry, and jacuzzi baths.

Sir Gordon has never visited any of them, not even the headquarters of Han- son Industries itself. This is not because Sir Gordon (who was knighted in 1979) dis- plays a Jamesian reticence about the sources of his wealth. Friends in England and the Untied States say he remains a passionate connoisseur of low-technology manufacturing businesses and his taste is as sure as ever. James, Lord Hanson, defers to his friend and partner when it comes to choosing which company they should buy next.

But for Sir Gordon, these businesses are not buildings, machinery and people but mere abstractions, generators of cash (good) or absorbers of capital (bad). He has no emotional commitment to his businesses at all. Even on Wall Street, people find his detachment striking.

What Sir Gordon cares about is Eng- land. The Park Avenue apartment, where he lives alone (after two divorces), is scattered with mementos of an ideal home- land: pictures of racehorses or great British sea-battles, a Chippendale mirror, a bottle of Lea & Perrin's. He regards Mrs Thatch- er as the saviour of the England he admires. And in the past few months he has been writing and talking of restoring British capital to its historic position in the US economy.

Sir Gordon's argument goes like this. Britain now has about $50 billion in direct investment in the United States This is just a fraction, in inflation-adjusted terms, of the British holdings of US assets before the Great War. These holdings had to be liquidated to finance the two world wars. `Every asset England had was sold at 10 cents on the dollar,' he said recently. 'Wall Street had a field day.'

In the March issue of Manhattan Inc. Sir Gordon developed the idea further. 'With North Sea oil a diminishing asset, Britain would have to have access to an increased earnings base from sensible overseas in- vestment to compensate. What better earnings base could there be than the United States?' British companies already derive a good part of their profits from the United States. But Sir Gordon White wants to make Hanson the largest British company, with half its business across the Atlantic.

Sir Gordon has not always been so attached to his homeland. Exiles often preserve a period flavour and Sir Gordon still carries the faintest air of the England of 15 years ago, of nights in Annabel's and days with the Slater boys, of asset-stripping and the property boom. All this came to grief in the bear market that began in 1973. He still speaks with passion about Edward Heath's deal with the miners, exchange control and the Government's obstruction of his plan to merge Hanson Trust, as it was then known, with Bowater, `I was 50 years old and should have been used to the decline of the country and the total ascen- dancy of the unions, but I wasn't,' he says. He was also broke. 'I decided it was over between me and England.'

Sir Gordon was so fed up he wanted to break with James Hanson, another York- shireman who had been his partner in business since the late 1950s, first in a greeting card company called Hanson- White and then through a string of take- overs of humdrum businesses in haulage, construction equipment, grain sacks and brick-making. `I wanted to be on my own. But James Hanson said: "I'll look after England, you go over there and have it all to yourself."

His start in the United States has be- come a business fairy-tale. He set up in a suite on the seventh floor of the Hotel Pierre on Fifth Avenue with Edward Col- lins, a likeable American lawyer who still works closely with him. The suite looked over the air-conditioning ducts of the Metropolitan Club. UK exchange control allowed Sir Gordon only £3,000, and they did not use the Pierre's room service. Outside, the bear stalked Wall Street and great American companies could be bought for a song, but the two had no money. `You couldn't cash a sterling traveller's cheque let alone borrow against a British balance-sheet,' he says.

But he did his first deal the next year. The company was called .J.Howard Smith (later called Seacoast) and it ran a typical Gordon White business, catching fish in the Gulf of Mexico and turning them into animal feed. The company cost $32 mil- lion. This vast sum was raised through a type of finance that was rare then but is now commonplace under the name of junk bonds; the loan was secured not on Han- son's balance-sheet but that of Seacoast.

Seacoast brought with it a valuable asset. This was its chief executive, David Clarke, who has since run the day-to-day opera- tions of Hanson Industries out of modest little offices near a railroad station in Iselin, New Jersey. With each year, these operations have expanded as Sir Gordon has bought ever bigger companies: Indian Head, Hygrade Food Products, Interstate United, McDonough, US Industries, SCM, Kaiser and Kidde.

When Sir Gordon pauses from a buying spree, Lord Hanson — a more methodical if less flamboyant businessman — moves forward, as if the two men were playing grandmother's footsteps. In the United Kingdom, Hanson Trust has bought British Ever-Ready, UDS, London Brick and Imperial Group. The group derives a clean half of its £6 billion revenues from each side of the Atlantic.

Sir Gordon, who left school early to work at his father's printing business in Hull, claims no special aptitude at busi- ness. He says he does not understand economics and does his thinking in the bath. He distrusts investment bankers and $250-an-hour Wall Street lawyers and is rarely seen with the harassed financiers and bony women of New York's haut monde.

But he did have one brainwave in the 1970s and it is still working well today. He recognised that many US companies, espe- cially the conglomerates created in the 1960s and early 1970s, were no better managed than their British counterparts. If management could be improved then, pre- sto! the value of the company would rise and profit would accrue to the owners, in this case Hanson.

He is cautious in selecting companies and quite ruthless once he wins them. Typically, he fires the entire head-office staff who, he says, get in the way of people who actually run the business. Whether he keeps operations or sells them depends on the kind of return they provide on Han- son's invested capital — and whether they may be worth more to somebody else.

His greatest coup was the purchase of SCM, a bureaucratic conglomerate which made typewriters, chemicals and processed

foods, among other things. Sir Gordon's offer was contested by SCM's management and the battle went to court, but he eventually bought the company for $930 million in-early 1986. He immediately sold off half the business for $980 million. He ended up with the other half of the company for nothing.

He is unlikely to repeat the success with Kidde, another dowdy conglomerate he bought for $1.5 billion while the stock market was collapsing last year. The City now grumbles that he paid too much for Kidde, but he could not have dropped his offer without ruining his credit with Wall Street. And there seems no obvious reason why his tested formula should fail this time. He knows it is much harder to buy companies than to sell them,' says Bob Cowell, a broker who used to work with Sir Gordon.

Sir Gordon could certainly do another big acquisition and make Hanson bigger than ICI. But the size of the company is no longer the question that matters. The limits to Hanson as an enterprise are not set by markets for capital any more but by nature. Lord Hanson and Sir Gordon White are at an age when many business- men retire, and they lack successors. It is an irony of business that they will probably need to acquire their successors in a takeover. For if they do not, Hanson will be broken up as it broke up SCM.